What The Silicon Valley Startups In My Life Taught Me

At this very minute, there are lots of little startups dotting Silicon Valley and beyond, going about their frat style living except with less money, more caffeine and zero socials. Average age: 24. That is the stereotypical picture of a startup that the public has grown to know and love.

However, startups do have many faces and are as diverse as the different communities that reside in the valley. Let me share with you what I’ve seen in my time:

Startup that hires interns to do all the dirty work

I worked as an intern at this place where the gurus and head honchos comprised the top half of the corporate hierarchy. The bottom half of the corporate structure was made up of cheaply paid highly skilled interns from a top university in the college town they were headquartered at. They recycled interns every semester to keep fresh wits and low salaries in that office. One interesting point: the CEO ended up canoodling with one of the female interns in my batch and my intern “friend” is now Mrs. Fricken I Own This Place.Average Age: 25My Take: $2,000/month and not a penny more; and my name in some old tech manuals, now obsoleteOutcome: Went public, did well at one point and was worth several hundred million in the NASDAQ.

Startup that meandered for 10 years but barely made it by the seat of its pants

Here’s one that took 5 years to get venture capital. That was because the founders worked on their idea part-time for that first 5 years before they got noticed. Yes folks, you CAN end up working for a long time and not get any money nor recognition and you MAY possibly end up in oblivion despite all your hard work. But if you’re a true entrepreneur, you will keep working on the product and that exit strategy. Eventually, someone bigger may come along and offer you a pittance but you’ll take it, happy you got a bit of a consolation prize.Average Age: 30My Take: Standard contractor’s wages of $75/hourOutcome: Acquisition price was not too exciting but acquiring company was (it had a great reputation).

Startup that took hundreds of millions in venture capital and blew it all

This was a fun one. I loved this startup where I spent the final years of the past century. This was the classic dot-com story that truly represented the epitome of the internet bubble. Money was no object then, for this company with a burgeoning engineering team of 100 strong and another 150 in corporate roles of unknown nature or significance. In 2 years, we had a revolving door of CEOs (3 to be exact) and a vision that remained muddied and unclear. Yet, I had a great time, made great friends and continue to be awed by the brilliance of some of the PhDs they brought into the company to comprise the R & D team. That was a time when patents = gold. The more patents you churned out, the more respected and rewarded you became. Today, many members from that elite engineering team are now real estate agents.Average Age: 32My Take: $90,000 annually to start; $125,000 by the time I was laid off; 100,000 stock options worth squatOutcome: There were 3 rounds of lay offs and I am proud to say I was kept till the very end; the place eventually imploded

Startup that knows not what it is doing but is raking it in big time

Here’s a private company where under the covers, nobody knows what’s going on; purchase orders are misplaced; employees bicker and finger-point. Yet….their profit is sky-high. This company does something very specialized so it makes gobs of money. What gives? The answer: the company is small and they’re in a niche space. So you see, you don’t have to know what you’re doing to make it, you just have to be the only one doing it.Average Age: 50My Take: Very good pay at $100/hr especially after the dot-com bust, but hours were erraticOutcome: Will continue its chaotic path until the founders retire or as they themselves say: “drop dead”.

So what did these companies teach me? That talent, genius and hard work in the region where I work is common-place, and what separates a company from the rest of the pack is innovation, the demand in the space it finds itself in, timing, and loads of luck.

I think innovation is the key now. The advent of online advertising programmes such as AdSense and the proliferation of open-source software has given start-ups a way to ensure modest revenue (even without selling a single product) while at the same time keeping the software costs low. Both of these factors combine to create a climate where venture capitalists are much less reluctant to invest into new start-ups.

At the same time, Google’s acquisition of YouTube for $1.65b not only showed that the Internet is a place worth spending money on, but also seems to have its rivals into a purchasing frenzy of their own – so we will probably see a lot of start-ups whose sole ambition in life is to get bought by Yahoo, Microsoft or Google. But what’s going to distinguish the purchased start-ups from the rest is the key factor that, as you said, is innovation.

Michael AndersOctober 24, 2006 at 8:08 pm

Wow! Those are definitely a bunch of start-ups. Talk about being a serial entrepreneur. I think it is great that you have so many entrepreneurial pursuits. I’m 19, in college, and am on my first start up. It likely will not be my last considering the rate at which I get board. I’m also am ambitious entrepreneur for my age. Most college entrepreneurs pursue easier B2C business models. I decide to pursue at cut-throat B2B business that hunts for capital for middle-sized companies. Right now I am doing great though, I have landed clients searching for over $60 million in financing while only being in business for 3 months.

George ChernikovOctober 25, 2006 at 3:52 am

Michael, congratulations! That’s one heck of a success story, especially for a university student! Best of luck!

Always happy to see new successful online start-ups – it really is the future of commerce!

Jonathan SpellOctober 25, 2006 at 7:35 am

Must be nice living in the hot bed for the web. Just curious are you able to share what companies they were?

Michael,
I was very impressed with how you juggle your projects and your double major. If only I had the energy to tackle all that! Seems like you’re accomplishing enough for two lifetimes and definitely an inspiration to young and old alike.

Jonathan,
I thought about divulging the company names but they may not necessarily ring a bell; though some are described in Wikipedia. I thought it prudent to keep them anonymous at this time, I’m sure you understand.

Flee The CubeOctober 28, 2006 at 8:27 pm

That’s quite a career path. It’s always fascinating to find out where people’s careers have taken them. I’m sure your future endeavours will be at least as cool as your past ones

MWAugust 11, 2009 at 6:59 am

Quite a mix. What are you doing now?

Also, sounds like the last one could use some healthy competition. Any hints?

I’m currently a “problogger” as you call someone who does blogging full time and for profit. I’ve since left the nine to five to do my own stuff. You can read more about what I’ve been doing in my “About page” or here.

Mouli CohenAugust 24, 2009 at 6:37 am

Interesting thoughts on startups. I have been involved in quite a few startups in my day as well and was interviewed recently about this very topic. I posted the interview to my Scribd account and thought I would share with this audience as well. Best of luck to all.

RodrigoDecember 5, 2009 at 8:18 pm

Very interesting article, I would like to ask, what is the best source of getting information about those opportunities. Thanks.

Keona LaboyOctober 21, 2011 at 1:44 pm

I am very interested in start ups, so this article piqued my interests. Very inspiring. I am trying a few ideas on my own but not yet ready to form a company :). Thanks.